Aiming to compete with Singapore and Switzerland, Hong Kong eyes tax incentives for hedge funds, family offices, and private equity firms.
A Push to Boost Offshore Finance Status
Hong Kong is advancing plans to exempt private equity funds, hedge funds, and family offices from taxes on gains from cryptocurrencies, private credit investments, and other assets. This 20-page proposal, currently under a six-week consultation, aims to enhance Hong Kong’s appeal as a global offshore finance hub amid competition from regional rivals like Singapore and Switzerland.
Patrick Yip, a vice chair at Deloitte China, emphasized the potential impact of this move: “This is an important step in boosting Hong Kong’s status as a financial and crypto trading hub.”
Expanding Investment Incentives
The proposal also seeks to extend tax exemptions to overseas properties and carbon credits, signaling an effort to provide certainty for high-net-worth investors and family offices.
Rivalry with Singapore
Hong Kong and Singapore are locked in a battle for financial supremacy, with Singapore’s more stringent anti-money laundering measures creating potential openings for Hong Kong. Darren Bowdern of KPMG notes the proposal aligns with the Chinese territory’s ambition to rival jurisdictions like Luxembourg.
Since 2020, Hong Kong has promoted its “open-ended fund company” structures, hosting over 450 funds, compared to Singapore’s 1,000+ Variable Capital Companies launched since their introduction.
Boosting Confidence Among Investors
The proposal aligns with a broader strategy to attract global capital and assert leadership in wealth management, a sentiment echoed by UBS CEO Sergio Ermotti, who acknowledged Hong Kong’s significant progress in challenging Switzerland’s dominance.
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